from the so-now-we-know dept

There was some oddity over the summer, when the Copyright Office flat out misrepresented copyright law to Congress and the FCC with regard to the impact on copyright of the FCC's (now dead) proposal to create competition among set top box providers. As we've explained over and over again, there were no copyright implications with the FCC's proposal. All it said was that if an authorized user wanted to access authorized content via a third party device, that authorized user should be able to do so. And yet, the Copyright Office, incorrectly, seemed to make up an entirely new exclusivity in copyright law (one that would outlaw DVRs) that basically said not only could a content provider license content to a cable TV provider, but it could also limit the devices on which end users could view that content.

Simply put: that's wrong. That's not how copyright law works, and we've known that since the Supreme Court's ruling in the Betamax case decades ago.

But why would the Copyright Office so misrepresent copyright law? That was the perplexing part. Even with a bunch of copyright professors explaining how wrong the Copyright Office was, the Office still went ahead with its letter. Of course, as with so many policy issues, it really seemed like the Copyright Office was just acting like a lobbying arm of Hollywood.

And that's because it was.

The EFF filed a FOIA request on the Copyright Office's emails and meetings concerning the set top box issue, and -- surprise surprise -- they basically coordinated directly with the MPAA and related lobbyists. The most stunning part? When both the MPAA and the FCC asked to meet with the Copyright Office about this, the Copyright Office quickly scheduled a meeting with... the MPAA. And pushed off the FCC meeting. And they lied to the FCC in the process. Then Copyright Office General Counsel Jacqueline Charlesworth's assistant told the FCC that she was not available to meet... on the very same week that she met with the MPAA over this issue. As EFF notes:

After the FCC announced its intention to break up the set-top box monopoly in February of this year, MPAA quickly called on the Copyright Office to meet on the matter. The documents indicate that the first meeting the Copyright Office held on the set-top box issue was not with the FCC but rather the MPAA. Although both the FCC and MPAA reached out to the Copyright Office in late March, Copyright Office officials met with MPAA on April 11 while postponing and meeting with the FCC a week later. Throughout the spring and summer of this year, the Copyright Office alternated between meetings with the FCC, MPAA, and other major content companies such as Comcast and Viacom. On May 31, just hours after holding a conference call with MPAA, the general counsel of Copyright Office emailed her counterpart at the FCC saying “the proposed rule may in fact implicate some rather serious copyright concerns.”

There was also a bizarre situation, in which a copyright maximalist Congressional Rep reached out to the Copyright Office, claiming that he'd heard from (recently fired) Copyright Office boss, Maria Pallante, basically asking him to officially request the Copyright Office's opinion on the FCC's plans. Others at the Copyright Office -- including Charlesworth -- note that they had been working under the impressiong that the Copyright Office was not seeking an official request from Congress to weigh in. The whole thing is quite bizarre.

But the really telling thing is that the Copyright Office basically spent all its time hearing from one side -- the MPAA and assorted studios, who disliked this idea not for any copyright reasons, but because they just wanted more control -- and totally ignored any other viewpoint (and certainly did not seek it out).

When the U.S. Copyright Office waded into the debate, it could have brought an end to the misleading hand-wringing over copyright. Instead, it did the opposite by echoing the MPAA and cable companies, claiming that if cable operators were required to allow customers to use the devices of their choice to view the programs they pay for, the studios’ copyrights would somehow be violated. They even went so far as to say the current copyright law landscape is insufficient and therefore the FCC must do more to protect rightsholders.

An agency that listens only to the views of some industry groups without seeking out additional opinions cannot be a reliably neutral expert for Congress or the FCC. We hope that the FCC will weigh the Copyright Office’s comments appropriately, and resist efforts to derail the agency's work to end the set-top box monopoly.

If you read through the document the differences here are quite stark. There are many, many meetings with Hollywood, and many of the emails are jokey and informal (my favorite is when long term NBC Universal lobbyist Alec French tries to joke around with Jacqueline Charlesworth by calling her Jacqui, and then realizes he may have insulted her). The emails for the small group of set top box companies are much more detailed and formal. This is yet another example of how the Copyright Office is captured by Hollywood.

California Gov. Jerry Brown on Saturday signed legislation that requires certain entertainment sites, such as IMDb, to remove – or not post in the first place – an actor’s age or birthday upon request.

The law, which becomes effective January 1, applies to database sites that allow paid subscribers to post resumes, headshots or other information for prospective employers. Only a paying subscriber can make a removal or non-publication request. Although the legislation may be most critical for actors, it applies to all entertainment job categories.

Quotes from actors' guild representatives and "industry leaders" present this as a positive change. Supposedly the removal of this information will result in fewer actors and actresses from being passed over for roles because they're "too old." Ageism may be an industry-wide problem but the correct solution would be to change Hollywood culture, not tap dance across the First Amendment.

“We are disappointed that AB 1687 was signed into law today,” said Internet Association spokesman Noah Theran. “We remain concerned with the bill and the precedent it will set of suppressing factual information on the internet.”

“Requiring the removal of factually accurate age information across websites suppresses free speech,” Beckerman wrote. “This is not a question of preventing salacious rumors; rather it is about the right to present basic facts that live in the public domain. Displaying such information isn’t a form of discrimination, and internet companies should not be punished for how people use public data.”

That's the problem with this law: it shoots the messenger rather than addresses the underlying problem. The government as a whole has passed many laws aimed at reducing discrimination, but in this case, the California assembly decided the onus should be on data aggregators that have absolutely nothing to do with the process of casting films.

It's unlikely this law will survive a Constitutional challenge, seeing as it prohibits the publication of facts. While any website can voluntarily choose to withhold this information, adding the government into the equation makes it a form of censorship.

The crafters of this law are claiming this speech suppression will benefit the little guy (and girl) the most:

[California Assemblyman Ian] Calderon said the law was more for actors and actresses not as well known as big stars.

“While age information for Hollywood’s biggest stars is readily available from other online sources, this bill is aimed at protecting lesser known actors and actresses competing for smaller roles,” Calderon said in the release. “These actors should not be excluded from auditioning simply based on their age.”

Calderon is correct. Actors should not be excluded simply because of their age. But that's a problem studios need to solve. And if they can't and legislators like himself still feel compelled to step in, the law should target discriminatory hiring practices, not IMDb and other sites like it.

from the nerd-harder,-nerds dept

We keep getting back to the whole "nerd harder" aspect of those who don't understand technology insisting that technology can accomplish just about anything, if those darn techies would just put their minds to it. We've seen it a lot in the encryption fight, but it's also been a big part of the copyright fights as well -- with Hollywood in particular repeatedly insisting that if these darn techies are so bright, why can't they just create technology that stops infringement. Of course, it doesn't work that way, but the industry still never seems to get it. A good reminder that technology isn't easy should come from this TorrentFreak story, noting that the "secure" system that Hollywood now uses to send out "screener" copies of movies had some pretty serious vulnerabilities, as found by Chris Vickery.

Late August, TorrentFreak was contacted by security researcher Chris Vickery of MacKeeper.com who told us that while conducting tests, he’d discovered an exposed MongoDB database that appeared to be an integral part of Awards-Screeners.com.

“The database was running with no authentication required for access. No username. No password. Just entirely exposed to the open internet,” Vickery told TF.

The researcher’s discovery was significant as the database contained more than 1,200 user logins. Vickery did not share the full database with TF but he did provide details of a handful of the accounts it contained. Embarrassingly, many belong to senior executives

While some will just look at this and mock Hollywood for bad security practices, it does raise more serious questions: if Hollywood can't figure out its own (basic) technology issues, why does it think that the tech industry should solve all its problems for it? If it doesn't even understand the basics, how can it insist that those in Silicon Valley can fix the things that it doesn't understand itself?

We're already seeing this with the MPAA's ridiculous and misguided freakout over the FCC's plan to have cable companies offer up app versions so that authorized subscribers can access authorized, licensed content. The MPAA and its think tank friends keep falsely insisting that the FCC's recommendation requires the cable companies to ship the actual content to third parties. But the plan has never said that. It only required that third-party devices be able to access the content -- such as by passing through credentials so that the content could flow from the (licensed) cable service to the end user.

The fact that these guys don't seem to understand the basics of how the technology works comes through not just in the fact that they failed to secure their screener system, but also in the policy proposals that they keep making. It's becoming increasingly difficult to take those policies seriously when they seem to be based on a fundamental ignorance of how technology actually works.

It details the obvious bits concerning the revolving door between copyright maximalists and the Copyright Office, with much of top management coming from jobs in the entertainment industries, and then many former top Copyright Office folks going right back into that industry upon leaving. But the more interesting part of the report is looking at how frequently the Copyright Office appears to blatantly misinterpret copyright law in an attempt to expand what the law actually covers.

From safe harbor provisions to statutory licenses, the Copyright Office has, for
decades, misapplied, ignored, or “creatively interpreted” statutory and common law. It
assumed a strained and flatly unfeasible reading of safe harbor provisions in order to strip
websites of statutory legal protections when they are sued by certain sound recording
rightsholders; concluded against the force of common and statutory law that a broad
“making available” right existed where it does not; and mischaracterized key aspects of
copyright law with regard to proceedings at the Federal Communications Commission, all in
support of the position of rightsholders against other industries and the public

That seems like it should be a pretty big concern, no?

There are some eye-opening examples of problems as well. For example, the time when the Copyright Office provided a memo in a lawsuit the record labels had filed against Launch Media. It originally included a footnote saying that Launch Media was likely a "non-interactive service" (which has many, many fewer restrictions than an interactive one). Magically, the footnote was then updated to say it wasn't a non-interactive service, but an interactive one. What changed?

In a memorandum from Kenneth L. Steinthal, attorney for Launch, admitted
into evidence at trial, Steinthal stated that he spoke with the individual in the
Copyright Office who drafted the footnote. Steinthal stated that according to
that individual, someone from the RIAA had called the Copyright Office and as
a result, the substance of the footnote was changed.

Yup. Apparently the RIAA can just make a phone call, and the Copyright Office is willing to switch positions overnight.

The report also notes how the Copyright Office keeps expanding its own mandate, and keeps getting smacked around for it. The examples of courts looking skeptically at the Copyright Office is fairly telling:

Courts have repeatedly taken a dim view of the Copyright Office’s analysis of larger
questions—and, on occasion, even of their judgment in their core function of issuing
registrations. The Second Circuit in Vimeo took the Office to task, slamming its analysis of safe
harbors in the Pre-1972 Sound Recordings report as “arbitrary and without legal
foundation,” “incompatible with a literal and natural reading of the text,” and “based in
major part on a misreading of the statute.” The Court also commented that the Office’s
position was “[a]t the very least, a strained interpretation—one that could be justified only by
concluding that Congress must have meant something different from what it said.”

The conclusion is that we need to rethink the Copyright Office and how it's set up:

The Copyright Office, isolated from effective mechanisms of governmental accountability,
has become deeply and troublingly captured by major entertainment industries and other
rightsholder interests. As a result, it has regularly disregarded the concerns of other
stakeholders, such as libraries, archives, and the public at large. It has frequently aligned
itself with the agendas of industry trade groups, pushed for expansion of copyright at the
expense of consumers’ established rights, and published reports that embrace extreme
interpretations that rise above and beyond the scope of settled law.

Of course, it's not too difficult to see how this came about. If you're not deep in the weeds of copyright issues, it's actually fairly natural to assume that the people who best understand copyright law are those in companies who use copyright law to their own advantage. Of course, that ignores that the very purpose of copyright law is not to benefit copyright holders, but the public (this is also something that the Copyright Office has, consistently, gotten wrong). But, that's like saying that the best banking regulators should be former bankers (oh wait...) and the best FCC commissioners should be ex-telco lawyers (oops). In the end, what we're seeing is pure regulatory capture, but it's especially troubling in the copyright context, given that copyright is explicitly designed with the benefits of the public in mind, and it's only over time (thanks to this kind of regulatory capture) that the mission has been warped and twisted to the false belief that maximizing copyright is important, rather than maximizing the public's benefit.

In a keynote address at the CineEurope convention this week, MPAA Chairman and CEO Chris Dodd described the unblocking goals as a threat to the movie industry. Encouraging participants to reach out to their representatives, Dodd described the concerns as “real, very real.”

“While the stated goals of these proposals are laudable – offering greater choice to European consumers and strengthening cultural diversity – in reality, these ideas could actually cause great harm to Europe’s film industries and its consumers,” Dodd said.

Opening up more markets and more users, while having less overall friction will be bad for the film industry? Only if it's run by complete idiots who don't know how to take advantage of a larger market. But, I guess that's the MPAA way!

Of course, it's not hard to understand what Dodd is really talking about. For years, Hollywood has been able to squeeze extra money out of a convoluted and corrupt manner of territorial licensing -- a system that may have made sense in a pre-modern world, but which hasn't made any sense at all in decades. But because the Hollywood studios abuse that system for profit, often making it impossible for people to see the content they want to see (and are willing to pay for), it doesn't want to change that system.

But, because it's Hollywood, they have a mythical fairy tale to try to make it all make sense:

“The European Union is made up of 28 different nations with different cultures, different languages, and different tastes. Forcing every film to be marketed and released the same way everywhere, at the same time, is a recipe for failure,” Dodd said.

“The ability of filmmakers and distributors to market and release their films where, how, and when they think best gives them the greatest chance to succeed,” he added.

Of course, this is the EU where (at least while the EU lasts... as may now suddenly be in doubt...) people are able to travel freely across borders. Which means that the country you live in may not be the country you grew up in, nor match the same cultural sensibilities. And, these days, it's entirely possible to market films through the internet to find their intended audiences. The idea that by getting rid of geoblocking you suddenly change any of the above points makes no sense. The films that are targeted in one geography can still be proactively marketed in those geographies -- it's just that they will also be available to people from those regions who now live elsewhere (again, making it accessible to a wider audience).

But, again, this is the MPAA that is so focused on locking things down and limiting consumers, it still doesn't realize that treating its customers badly is why the MPAA is so hated.

from the also:-three-big-funders-of-politicians dept

Tons of people seem (quite rightly) concerned about the Trans Pacific Partnership (TPP) agreement. As we pointed out last week after the final text was finally, released, the agreement has a lot of really big problems. But if you want to understand just how bad the agreement is, perhaps you should just look at the industries that like it. Vox notes that Big Pharma and Hollywood love the agreement while The Intercept notes that Wall Street loves it.

It should be noted that, actually, Big Pharma is apparently a bit disappointed that the TPP doesn't go far enough in locking up exclusivity for biologics.

That said, talk about three of the most hated industries around: Hollywood, Big Pharma and Wall Street. But, more importantly, talk about three of the most protectionist, anti-free trade industries around. We've been repeating over and over again that the TPP is not a free trade deal and this should be more confirmation. Hollywood, Big Pharma and Wall Street are probably three of the biggest industries to rely heavily on government regulations as a way to limit competition, limit innovation and to use that exclusivity to artificially increase prices at the expense of the public.

And they like the deal.

That's because it's not a free trade deal at all. It's not about "taking away" barriers to trade, it's about building bigger barriers in the form of protectionism to protect big, legacy industries from innovation and competition. Of course, it's no surprise that Hollywood, Big Pharma and Wall Street are also three of the most powerful lobbying industries in Washington DC, because when you can no longer innovate, and you rely on government protectionism, you focus your efforts on "political entrepreneurship" -- better known as getting the government to protect you from real entrepreneurship. So, no wonder the USTR went this direction. They only hear from these kinds of industries, and the end result is a fake free trade agreement that is designed to do the exact opposite. It's designed to build up barriers to protect old, stodgy industries who have relied on protection from competition from decades, and don't want to see that dissolve against foreign competition.

Thanks to the overperformance of N.W.A biopic “Straight Outta Compton,” Universal Pictures is tracking to cross the $2 billion mark at the domestic box office on Saturday, setting a new speed record in doing so.

Universal’s historic climb will break Warner Bros.’ previous record of reaching $2 billion by December 25, 2009. The studio is also extremely likely to break the record for all-time domestic box office high, which was set by WB in 2009 with $2.1 billion.

That does not sound like an industry that is having a problem getting people into the theaters, even if the movies are available via infringement. But, people will argue, these services are actually harming the "home video" revenue stream. But that's questionable as well. First off, it was Hollywood that angrily fought against ever allowing a home video market in the first place (remember that?). And, more to the point, we've seen over and over again that when the industry actually adapts and offers content in a reasonable format at a reasonable fee, people will pay at home, just like they do in theaters.

But, of course, due to continued Hollywood confusion and jealousy, it's still holding back lots of movies from Netflix streaming -- one successful service that has shown that it's totally possible to "compete" with infringing content.

So, again, it's confusing as to what Hollywood's real complaint is. It's shown that if it makes good films, people will go out to the theaters to see them, rather than just watch them online. And if it offers them in a reasonable manner for a reasonable price online, people will pay for that as well. And yet, it doesn't do a very good job of this and then blames the internet for its own failures to adapt. Seems like a weird strategy. If I were an investor in those companies, I'd wonder why they've spent the better part of two decades so focused on "stopping piracy" rather than doing a better job delivering what the public wants.

from the because-of-course dept

You had to know this was going to happen. Now that the US Trade Rep (USTR) has fast track authority after Congress caved in and passed the Trade Promotion Authority bill, efforts have ramped up to complete the Trans Pacific Partnership Agreement with meetings in Hawaii this week. Of course, with fast track in hand, the USTR doesn't need to concern itself at all with things like the "public interest" anymore and can focus on the real agenda: big corporate interests. Reports from the negotiations include one from the legal policy adviser from Doctors Without Borders, noting that the USTR organized a briefing for "US stakeholders," but only invited industry representatives. Oh, and the US Chamber of Commerce (the main lobbyists for SOPA) was allowed to book a room next to the negotiating room and got a private briefing from the USTR. Meanwhile, James Love from KEI notes that in a USTR briefing, USTR staffers are deliberately ignoring anyone representing the public interest.

You know who they are listening to, however? You guessed it: Hollywood. Politico notes that now that fast track is in hand and the USTR has more or less free rein in completing the negotiations, Hollywood has jumped in with a bunch of demands to expand copyright laws via TPP:

We've seen the Hollywood versus tech copyright fight play out over everything from SOPA to the Library of Congress. Now the major movie studios are pushing for key items on their wish list as negotiators hammer out the final details of an Asia-Pacific trade agreement. The studios hope the 12 countries working on the pact will agree to copyright protections that, in many cases, last longer than what’s currently in place, Pro Trade’s Doug Palmer reports.

The movie studios also want stricter penalties on piracy, especially as Internet access expands throughout the region.

And, because the USTR almost always gives in to Hollywood (it helps that the MPAA hired the top USTR negotiator on IP last year, so the current negotiators recognize that their next jobs are on the line with this agreement), it appears that the US has convinced a bunch of other countries -- who should know better -- to agree to lock in a life + 70-year copyright term, even as the US Copyright Office has suggested that current copyright terms are too long and should be scaled back.

There is no way to explain this as anything but selling out the public interest to appease corporate interests of Hollywood. It's a fairly disgusting display of the kind of "dealmaking" that the USTR has been pushing for more quietly for years, but now that it has fast track, it knows it can play hardball to help its friends in Hollywood. Fuck the public domain, Hollywood wants to keep getting paid for works from decades ago.

from the lobbying-by-any-means-possible dept

Hollywood's efforts to win political clout have always stretched across the country, from glitzy campaign fundraisers in Beverly Hills to cocktail parties with power brokers in Washington.

Last year, the film industry staked out another zone of influence: U.S. embassies. Its lobbying arm paid to renovate screening rooms in at least four overseas outposts, hoping the new theaters would help ambassadors and their foreign guests "keep U.S. cultural interests top of mind," according to an internal email.

That was the same year that the Motion Picture Association of America, which represents the six biggest studios, reported it was lobbying the State Department on issues including piracy and online content distribution. Hollywood's interests – including its push for tougher copyright rules in the Trans-Pacific Partnership trade pact – often put the industry at odds with Silicon Valley.

The only public indication of the embassy-theater initiative was a February 2015 press release from American officials in Madrid, titled "U.S. Embassy Launches State-of-the-Art Screening Room." It credited "a generous donation" from the MPAA.

Asked about its gifts to the State Department, the lobby group declined to say how many embassies got donations or how much they were worth.

"Because film is a great ambassador for U.S. culture around the world, MPAA assisted with the upgrade of some embassy theater facilities," said spokeswoman Kate Bedingfield. "All gifts complied with the law as well as with State Department ethics guidelines."

Nicole Thompson, a State Department spokeswoman, said at least three embassies besides Madrid received between $20,000 and $50,000 in entertainment upgrades last year – London, Paris and Rome. The revamped screening rooms, she said, aren't intended to entertain U.S. officials, but rather to help them host screenings to promote an American industry and sow goodwill.

Thompson said the donations were proper and that all gifts to the department are reviewed to avoid even the appearance of a conflict of interest. "The department has explicit authorities to accept gifts made for its benefit or for carrying out any of its functions," she said.

The State Department routinely accepts gifts from outside groups, Thompson said. She couldn't provide any other examples of major gifts from groups that simultaneously lobby the agency. Thompson declined to list the items given by the MPAA or their total value, and wouldn't say whether the group had made similar gifts in the past.

There was at least one precedent. A spokesman for Warner Bros. Entertainment said the studio helped pay for the refurbishment of the screening room at the U.S. ambassador's home in Paris in 2011. "This donation was coordinated with the State Department and complied with all appropriate rules and regulations," the spokesman said.

State Department policies posted online specifically permit gifts from individuals, groups or corporations for "embassy refurbishment, " provided that the donors are vetted to ensure there's no conflict or possible "embarrassment or harm" to the agency. The posted policies include no caps on the value of donations, nor any requirements for public disclosure of foreign or American donors. The rules also say that the donations can't come with a promise or expectation of "any advantage or preference from the U.S. Government."

Obtaining an advantage, albeit a nonspecific one, sounded like the goal when a Sony Pictures Entertainment official wrote to the studio's chief executive officer, Michael Lynton, to relay a request to fund the screening rooms from Chris Dodd, the former U.S. senator who heads the MPAA. The executive writing the note – Keith Weaver – sought to assure the CEO that such a donation wouldn't be improper.

"The rationale being that key Ambassadors will keep U.S. cultural interests top of mind, as they screen American movies for high level officials where they are stationed," reads the message, included in a cache of emails hacked from Sony and which were posted online by the website WikiLeaks.

"The cost implication is estimated to be $165k (aggregate of $$$/in-kind) per embassy/per studio. Apparently, donations of this kind are permissible."

The MPAA has long been a powerful presence in the nation's capital, spending $1.34 million on federal lobbying last year, according to data compiled by the Center for Responsive Politics. One of its flashier tools has been to host exclusive gatherings at its Washington screening room, two blocks from the White House, where lawmakers get to watch blockbuster films, rub elbows with celebrities, and up until several years ago, enjoy dinner – a perk scuttled because of stricter rules on congressional lobbying.

Hollywood studios depend on foreign markets for much of their profit but the MPAA's interests don't always align with those of other major American constituencies. For example, Hollywood studios have moved some film production to Canada to cut costs. American film workers have tried to get the federal government to stop the outsourcing of jobs, but have been met with resistance from the MPAA.

The trade group has also pushed federal officials to pressure foreign governments into adopting stricter copyright laws. An MPAA-funded study found that in 2005 worldwide piracy cost American studios $6.1 billion in revenue. That number has been disputed by digital rights advocates.

For the TPP trade deal, the MPAA has discouraged the American government from exporting "fair use" protections to other countries. In a hacked message from Dodd to the U.S. Trade Representative, the MPAA chief warned that including such provisions, which in American law allow limited use of copyrighted materials without permission, would be "extremely controversial and divisive." Digital rights activists have characterized the efforts as overzealous.

"They're basically encouraging other countries to adopt the most draconian parts of U.S. copyright law and even to reinterpret U.S. copyright law to make it more stringent," said Mitch Stoltz, an attorney for the Electronic Frontier Foundation. "Broadly speaking broadening copyright law harms free speech in many cases by creating a mechanism for censorship."

The state-of-the-art screening rooms are a relatively minimal investment by Hollywood as it works to strengthen connections abroad.

This spring, the U.S. ambassador to Spain, James Costos, brought a group of foreign officials to Los Angeles for a meeting hosted by the MPAA. Among them were representatives from the Canary Islands, who came prepared to discuss filming opportunities and tax incentives for American studios in the Spanish territory. The State Department touted the trip as an opportunity to "expand bilateral trade and investment, including through ties between the entertainment industries."

It's not known whether the path to that particular meeting was eased by the new screening room in Madrid. At the theater's debut in February, the ambassador's guests were treated to a dark tale of corruption, lobbying and double-dealing in Washington – the Netflix series "House of Cards."

from the needs-an-investigation dept

For many years, we've written about what an incredible scam state tax subsidies to filmmakers are. Various states shove each other aside trying to throw more money at Hollywood, if they just agree to make their films locally. Hollywood insists that these subsidies are good for the states, because they "create jobs." But the details almost always show otherwise. They are almost always a massive loss to the taxpayers. What jobs are created are temporary -- and often filled by people who fly in from out of town. What "downstream" economic benefits are created are marginal at best. Almost every study of these subsidies has found that they lose money overall. And yet, the states keep expanding these programs, sometimes betting pension funds on them.

So the big question has to be: why do states keep throwing money at Hollywood this way?

The answer, it appears, may have an awful lot to do with out and out corruption.

In the past few years, film programs across the country have been wracked with criminal charges and convictions. Louisiana is in the midst of a criminal trial against individuals charged with fraudulently collecting more than $1 million in state film tax credits for the creation of a film studio in New Orleans. Massachusetts has faced its own criminal trials over tax credit fraud. And in Iowa, a state audit found $26 million in improperly issued tax credits, and a subsequent investigation resulted in 10 criminal cases and 7 convictions. The state ultimately suspended its program in 2009. Nearly six years later, the state is still in the midst of sorting out the criminal trials surrounding its program.

This corruption has also extended to those in positions of determining how these programs work and who receives the available funds. California is currently in the midst of its own film-subsidy scandal involving a state senator, Ron Calderon, who headed the select committee on film and television and was a member of the California Film Commission. Indicted on 24 felony charges, and facing a maximum sentence of 396 years in federal prison, Calderon is accused of accepted cash bribes from an undercover FBI agent who he thought was associated with an independent film studio. In exchange, he agreed to advocate for an extension of the film tax credits.

Politicians also use their support for incentives, or the threat of removing them, to induce political contributions for Hollywood beneficiaries. For example, in another Sony an email dated January 6, 2014, NY Governor Andrew Cuomo’s “people” request Sony commit to raising $50k by July of 2014. The email continues, “$50k is a heavy lift since most of it needs to come from individual contributions (only $5k can come from corp.)” There are then severalotheremails from Sony’s head of government affairs soliciting contributions. In one of them he notes “Thanks to Governor Cuomo, we have a great production incentive environment in NY…Because of all of this, I think it’s important to significantly support his reelection efforts…”

So, notice that there are three parties at work here -- but only two of whom are actually represented. Cuomo gets campaign funds he wants. Hollywood gets tax breaks they want. It's just the taxpayers who aren't represented and get shafted.

And, as Koopman notes, each year the MPAA sends out a celebratory email highlighting just how much the studios have been able to fleece from taxpayers:

As you have requested annually, attached is the State Government Affairs Department Annual Report for 2013. As you will read, this year MPAA saved the member companies collectively an estimated $110.08 million in corporate tax liability on an annual basis and approximately $86 million in potential regulatory, administrative, compliance and legal fees, also annualized, as a result of accomplishing legislative objectives in the states.

Since 2007, the aggregate annual savings secured by MPAA for the member companies in connection with key corporate state tax legislation is approximately $439.08 million. This is a result of the enactment of single sales factor apportionment in California, and New York City as well as favorable advertising and licensing corporate tax sourcing formulas adopted in North Carolina, Michigan, Illinois and Louisiana.

In addition, states awarded an estimated $1.5 billion in production tax credits in 2013, according to the Los Angeles Times, which MPAA either was engaged in enacting or keeping in place. The majority of those credits went to MPAA member companies as a result of motion picture and television location production in various states, with per project savings ranging from 10 to 30 per cent.

We had another successful year thanks to the hard work of Melissa Patack, Angela Miele, Sarah Walsh, Brian Cohen and Carlin Scrudato, as well as all of your tremendous support, engagement, and encouragement. Also, special thanks to the executives on the state tax, legal and IP working groups, whose expertise and involvement is invaluable. As you know, our contract advocates in the 50 states, who are critical to our success, work tirelessly for MPAA and the member companies. Our coalition partners also played major contributing roles, in particular NATO, DGA, SAG, IATSE and Teamsters.

I don't begrudge the MPAA/studios doing this. Of course, they're going to scrounge for free money from the states who are willing to give it. But it seems problematic given how these programs time after time after time have been shown to be massive failures, often leaving states in serious trouble. At the very least, it seems to deserve deeper scrutiny by the public and government officials as to exactly why states are so ready to hand out this kind of money.